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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
Republic Services Inc has a M-score of -2.68 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Republic Services Inc was -0.53. The lowest was -3.04. And the median was -2.77.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Republic Services Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.9619||+||0.528 * 0.9492||+||0.404 * 0.998||+||0.892 * 1.0513||+||0.115 * 0.97|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9716||+||4.679 * -0.0398||-||0.327 * 0.993|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $966 Mil.|
Revenue was 2225.3 + 2073.7 + 2141.5 + 2165.4 = $8,606 Mil.
Gross Profit was 852.3 + 752.5 + 857.5 + 847.8 = $3,310 Mil.
Total Current Assets was $1,225 Mil.
Total Assets was $19,876 Mil.
Property, Plant and Equipment(Net PPE) was $7,127 Mil.
Depreciation, Depletion and Amortization(DDA) was $971 Mil.
Selling, General & Admin. Expense(SGA) was $854 Mil.
Total Current Liabilities was $1,706 Mil.
Long-Term Debt was $7,042 Mil.
Net Income was 179 + 132.5 + 236.6 + 171.4 = $720 Mil.
Non Operating Income was -1 + 1 + 0.8 + 1 = $2 Mil.
Cash Flow from Operations was 325.9 + 396.4 + 411 + 375.7 = $1,509 Mil.
|Accounts Receivable was $956 Mil.
Revenue was 2111.7 + 1998.6 + 2028.4 + 2046.9 = $8,186 Mil.
Gross Profit was 701.7 + 775.5 + 744.9 + 766.4 = $2,989 Mil.
Total Current Assets was $1,269 Mil.
Total Assets was $19,774 Mil.
Property, Plant and Equipment(Net PPE) was $7,018 Mil.
Depreciation, Depletion and Amortization(DDA) was $924 Mil.
Selling, General & Admin. Expense(SGA) was $836 Mil.
Total Current Liabilities was $1,751 Mil.
Long-Term Debt was $7,013 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(966.3 / 8605.9)||/||(955.5 / 8185.6)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(752.5 / 8185.6)||/||(852.3 / 8605.9)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (1225.1 + 7126.9) / 19876)||/||(1 - (1268.8 + 7017.7) / 19774.2)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(923.9 / (923.9 + 7017.7))||/||(971.3 / (971.3 + 7126.9))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(853.9 / 8605.9)||/||(835.9 / 8185.6)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((7042.1 + 1705.5) / 19876)||/||((7013.3 + 1750.8) / 19774.2)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(719.5 - 1.8||-||1509)||/||19876|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Republic Services Inc has a M-score of -2.68 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Republic Services Inc Annual Data
Republic Services Inc Quarterly Data